IA Critical Study of the Impact of Institutional Finance on Agriculture in Selected Villages of Ernakulam Revenue District

Vast changes have taken place in the field of institutional rural credit in India since the nationalisation of nineteen commercial banks in 1969. The supply of institutional finance to cultivators amounted to 63.2 percent of the total credit in 1981 compared to 31.2 percent in 1971. Insti tutionalisation of agricultural credit envisaged two objectives in general. One was to emancipate cultivators and farmers from the clutches of indigenous financiers and money lenders. The second was to make farmers financially capable of adopting the new technology or improved practices in agriculture so as to increase their agricultural production and thereby contributing to the development of agriculture in India. Though vast literature on Institutional Credi t and agriculture is available, no indepth and serious work examining thoroughly the cause of credit diversion has been undertaken so far. The present study is an attempt to fill up this gap. The study will be helpful to lending insti tutions, viz. Co-ope:r-atives, Commercial banks and various other insti tutional agencies in connection with their lending activity_ Also, the study will help government in .formulating proper policies that will insure a preferential treatment in favour of the most needy category of farmers and cultivators with respect to agricultural credit disbursement